Watchdog: Feds say the mob seized a Dallas County business

The Mafia is known as La Cosa Nostra, which means “this thing of ours.” But this thing is not supposed to be in North Texas. Certainly not in a gleaming glass and steel office tower on the western edge of Las Colinas. Certainly not in a boring mortgage company.

But that’s what federal prosecutors say happened in Irving a few years back. They say the son of the former godfather of the Philadelphia mob and the son’s associate known as “The Consultant” invaded FirstPlus Financial Group by scaring off the old board of directors and installing lackeys in their place.

Feds say that with the help of others, the pair pulled $12 million in cash out of the company in less than a year. They bought a Bentley, an airplane, expensive jewelry, a condo, a home in a New Jersey seaside community and a yacht they named Priceless.

They also arranged for FirstPlus to buy companies they owned for inflated prices. And they paid themselves and their cronies oversized consulting fees, as high as $100,000 a month. The scheme caused the original stockholders of the company to lose money.

Now the pair is paying a steep price. They and their alleged accomplices are in the fifth month of a trial on federal charges of racketeering and financial fraud. The trial in Camden, N.J., may go to a jury this week or next.

Lawyers for the defendants argue that their clients are serious businessmen trying to turn around a troubled company. They could have succeeded if the government had not interfered, they say.

The defendants’ lawyers also charge that the government is after publicity by chasing Nicodemo S. “Junior” Scarfo, the son of Nicky “Little Nicky” Scarfo, the former godfather now in prison for life. The younger Scarfo’s partner in this venture, feds say, is Salvatore Pelullo, described as a mob wannabe.

Both the younger Scarfo and Pelullo are felons. That’s why they kept their names off the company’s legal papers, feds say.

According to a 2011 indictment and court testimony, the pair learned that FirstPlus had a weak leadership structure and a mountain of cash.

In the 1990s, FirstPlus was a multibillion-dollar mortgage company with a publicly traded stock price that went as high as $60 a share. But the company suffered. The stock price dropped under a dollar.

FirstPlus stopped writing new business, but the company held $12 million in cash and cash equivalents from securitized pools of mortgages. Ripe for a different kind of corporate takeover.

Two usual ways to take over a company are buying lots of stock or triggering a proxy fight for election of new directors. Those methods would have alerted the U.S. Securities and Exchange Commission.

Instead, Pelullo traveled from Philadelphia to Texas and talked to individual board members. Scarfo, prohibited from traveling because he was on probation, stayed back in Philly.

But Pelullo made clear that he had the backing of Scarfo, whom the feds call a made man in the Lucchese crime family.

Pelullo told one director, the feds say, that unless he helped them install five new members, he would sue him for financial improprieties.

Five new board members, all cronies, were installed. Then the old board members — promised generous severance packages — resigned. That left the new owners in charge. Then the money flow began.

No one was allowed to object. Pelullo, in a wiretapped conversation talking to a new board member, said: “If you ever rat, your wives will be [expletive] … and your kids will be sold off as prostitutes,” the indictment states.

Pelullo celebrated — in a taped conversation — by phone with the younger Scarfo.

“We crushed them,” Pelullo said. “It was all upon your direction. … Talk to your pop and let him know.”

In another conversation, Pelullo plotted Scarfo’s invisible role in the company. Pelullo told the younger Scarfo that he tells others in the company, “We gotta follow this guy.”

“Just because they didn’t see you and I try to enforce that, it was, you know, you behind the scenes and I was just a conduit … through you to make sure that things got done the way we planned to get them done.”

The $12 million oozed out in 2007 and 2008. The FBI raided the Irving office tower in 2008.

The business’s main bank account had less than $2,000. The company filed bankruptcy in 2009.

Why come to North Texas? George Anastasia, a crime reporter covering the trial for bigtrial.net, gives me the lowdown:

“The mob goes wherever the money is, and there’s plenty of money in Texas. This was an opportunity, and they grabbed it.”

Along with court documents I studied, Anastasia’s reporting on this for the past five years forms the basis of this story. (Anastasia and I were colleagues for 10 years at The Philadelphia Inquirer. He is one of America’s top mob experts.)

He tells me, “What the evidence, I think, purports to show is what you had here was a typical mob bust out — except instead of taking over a bar or a restaurant, Pelullo and Scarfo took over a mortgage company. They siphoned $12 million out of it, and they left a shell. That’s the government’s position.

“Now the defendants’ position is, you know, ‘We tried our best and we failed.’

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About Dave Lieber

The Dallas Morning News' investigative columnist Dave Lieber focuses on wrongdoing and right-doing in businesses and governments. Known largely for his twice weekly 'Watchdog' column in the Fort Worth Star-Telegram for the past 20 years, Dave brings his brand of investigative energy and what he has dubbed "Watchdog Nation common sense" to a twice-a-week column, appearing Fridays and Sundays.

Aside from creating his WatchdogNation.com consumer rights movement, Dave also created his all-volunteer charity, Summer Santa, which provides assistance for impoverished children in North Texas.

"Dave has one of the most trusted voices in North Texas and our newsroom is honored to have him here," said Bob Mong, editor of The Dallas Morning News. "For 20 years, people in Tarrant County knew they had an advocate, someone in their corner to help them solve problems with business or government. We're lucky to have him, and we think readers across the region will feel likewise."

Lieber won the Will Rogers Humanitarian Award in 2002 from the National Society of Newspaper Columnists, for work that "best exemplifies the high ideals of the beloved philosopher-humorist who used his platform for the benefit of his fellow human beings." Lieber is also a sought-after speaker, appearing in front of more than 100 audiences each year.

"Although I was at the Star-Telegram, I have always admired the newsroom, reputation and writers of the Morning News," said Lieber. "Bob [Mong] shared with me the paper's dedication to consumer support and advocacy, which is why I'm thrilled 'The Watchdog' has a new home up the road on I-30."

About Marina Trahan Martinez

As Watchdog Desk Administrator, Trahan Martinez has served on the front line for readers calling for help and as an ambassador for The News. She began as a reporter in 2000 covering law enforcement, city politics and schools at the Arlington Morning News. Since 2001, she has covered 9/11 aviation issues; the second Bush administration’s Holy Land Foundation asset freeze; and the complexities of shale gas collection for The New York Times. She has assisted The News’ investigative team on its Parkland/UT Southwestern coverage and its Unequal Justice series.